What I tell people when they ask me if they should buy crypto…
I post stuff on the socials about crypto. I talk about it at parties. I’m in weird telegram groups with 25 year old anonymous millionaires that throw insane amounts of money at untested projects. I’ve helped market ICOs, and I’ve made and lost money watching the crypto charts go up and down. At the same time, I’m not a die hard fanatic. I spend half my time thinking about crypto, and the other half working on completely unrelated projects. Most of my friends don’t own crypto or really even understand what the hell it’s all about. They see reports on CNBC and they ask me “should I invest in this?” It’s FOMO at it’s finest really. BUT, in an effort to consolidate my thoughts on the matter and point all you lovely people to a blog post so I don’t have to keep answering these questions over and over again — here goes nothing:
I believe in Blockchain
Above all else, I believe in the underlying technology that powers cryptocurrencies: blockchain. If you’re reading this and you still don’t understand what blockchain is, that might be a better place to start than investing. A common acronym in the crypto world is DYOR (Do Your Own Research), and I recommend you start with Andreessen Horowitz’s Crypto Canon. If you don’t know who they are, pick 10 well known tech companies, and they’re probably the VCs behind at least 8 of them.
In short, blockchain is a new technology that solves something called the double spend problem. Before the advent of bitcoin (and the underlying technology called blockchain), digital currency was an impossibility because replicating digital assets on the internet is really easy. If I want to sell you say a picture I took on my iphone, there’s nothing to prevent me from making copies to sell to other people. Money cannot work that way. Blockchain prevents that from happening, and now you can create digital tokens/coins/bits etc. that are completely unique and cannot be reproduced. This leads to all sorts of innovations, including the recent ICO craze where startups raise money by selling tokens instead of or in addition to equity. It’s kind of like kickstarter without kickstarter as the middle man. We’re just beginning to scratch the surface of what the blockchain is truly capable of.
In the near future, we’ll probably all be using tokens / cryptocurrencies of some sort to pay for things and access all sorts of products. Likewise, the stock market is going to look a hell of a lot different than it does today, but that’s outside the scope of what you need to know if you’re just trying to make a quick buck buying the next bitcoin.
Investment = Risk
Investing in anything means you could lose all your money. The great depression happened. The great recession happened. We’re in the midst of the greatest bull run in a long, long time, and for young people it’s easy to avoid the lessons of history and see that if you bought netflix a few years ago, you would have made a ton of money. And you could still make a money investing in everything from stocks to crypto or your roommates new coffee shop. You could also lose it. In short — never invest money you can’t afford to lose. It’s not worth mortgaging your house or not paying rent so you can make a few extra shekels and sound cool at parties because you rode the crypto wave.
Today, Crypto = Gambling
While I believe in blockchain, I also believe in history and the fact that it repeats itself. If you buy a general index mutual fund or ETF and hold onto them for the rest of your life, history shows that you will make roughly 7% returns every year on average. There will be ups and downs, some dramatic, but you’ll probably have a lot more money than you started with. Investment is all about mitigating risk, and there are tried and true strategies that have worked for decades to help people make money with their money. Barring the end of the global financial system (in which your retirement savings will be the least of your worries), having fractional ownership in large organizations is not going away.
The same is probably not true of any of the cryptocurrencies that exist today. 10 years from now, we may have a world that is powered in many ways by all sorts of technologies that haven’t even been invented yet. Bitcoin could get disrupted 10 times over. No one really knows, and anyone that tells you otherwise is lying.
Furthermore, crypto is largely unregulated. Last time I checked, governments are still a pretty big deal. Ask Edward Snowden how going up against the US Government works out — it’s usually not pretty. And the US government has a lot invested in the dollar, so don’t expect them to roll over and let something like Bitcoin become the “digital gold” so many claim it’s going to be.
Think about how many apps you have downloaded since first getting a smartphone. If you’re under the age of 35, it’s probably a lot. How many do you use with any regularity? Right now, there are literally thousands of crypto currencies, nearly all of them aren’t actually used for anything, and most of them are probably going away. Picking the handful that are going to stick around is really, really hard.
If you like gambling…and you’re curious
Personally, I like gambling. Life is short, I’m blessed with a bit of disposable income, and the modicum of wisdom I’ve accumulated over my 28 years on this planet have shown me that the most successful people are those that A) take risks and B) invest. It’s really hard to buy a private jet or a big house, or put kids through college, unless you go against the grain AND/OR put your money to work. The sooner you do that, the better you’ll get at it and the more money you stand to make.
More importantly, I’m curious by nature. I like understanding how things work, at least on the surface, and having money in crypto has consistently inspired me to stay ahead of the proverbial curve and reach for an understanding of what the future of finance might some day look like. I cared far less about the stock market when I didn’t own any stock, and similarly, I watched bitcoin ebb and flow for years without buying in. Once I put money on the line, I became more immersed in the community, the language, and blockchain’s potential to create a different world than the one we live in now.
So if you’ve read this far, and you still want to invest in crypto. Here goes nothing…
Start with Coinbase…
The easiest way to get started buying and HODLing (crypto speak for holding, ie. not selling. Some dumbass was drunk and spelled hold wrong and it stuck) is to set up a coinbase account. Coinbase is a fairly simple web and mobile app. You connect with your bank account, and you are faced with four things you can buy: Bitcoin, Litecoin, Bitcoin Cash, and Ethereum. These are some of the most reputable and largest cryptocurrencies. Buying them and forgetting about them is not a bad strategy.
Personally, I like Litecoin and Ethereum. I’ve never owned bitcoin for one simple reason: above all else, I think crypto is a technology. The first wave of a new technology almost always gets steamrolled by those that learn from the initial innovations and improve on them. Litecoin and Ethereum are early examples of innovations built on the back of bitcoin. They are the facebook to myspace and friendster.
I love Ethereum and have most of my money in that, purely because it’s the most used cryptocurrency. The ICO crazy of the last 18 months is primarily because of Ethereum, and you can think of Ethereum like your iphone — where it enables app developers to build cool things on top of it whereas bitcoin is like your mastercard — it just exists to make payment/move value around.
WARNING: leaving your money on an exchange, unlike in a bank, is historically risky. Exchanges get hacked, people lose hundreds of millions of dollars, and while coinbase has never been hacked and it seems to be a fairly stable platform, you can move your crypto off of that account and into a place that is safer albeit less convenient.
If you’ve bought some crypto on coinbase or another exchange, and you’re ready to dive in even deeper, your two next steps are to get onto another exchange that lists many, many more tokens and to move your coin out of Coinbase.
Set up a metamask or myetherwallet in your browser, and follow these tutorials to try moving your crypto from one wallet to the next. Or if you want to feel cool like Axe in Billions, buy a ledger and move your crypto into cold storage and onto a fancy looking thumb drive called a hardware wallet.
To send crypto out of coinbase, just text yourself your wallet address, copy and paste it, go to send funds in Coinbase, quadruple check you have the right address and that you are sending to the right type of wallet (there are different wallets for different types of currencies. If you send litecoin to an ethereum wallet, you will lose it). I recommend first sending a tiny amount, say $10 to make sure you don’t fuck up the transaction. If that goes through, repeat.
Now that you’ve moved some token around, your next step is to trade one crypto for another. This is called “trading pairs,” so you’ll be swapping ETH (ethereum) for NEO (Neo) or some other currency/token you can’t buy on coinbase. Check out CoinMarketCap for a list of the most highly valued tokens and try buying some.
Read some white papers
As a curious communicator, my favorite thing about crypto and the blockchain community is how open people are. They’re so open that nearly every project publishes their business plan in the form of a “white paper” while in the early stages of development and releases it for the entire world to see. Imagine being able to see AirBnb’s investor pitch deck and their technical specs before they became a household name. The learning you can glean from these white papers is incredible, and I’ve gathered much of what I know about crypto by diving into the papers from leading projects.
The future is always a gamble
Living is basically a gamble. Every time I go to cross the street, there’s a risk. Banks provide the illusion of safety, so does owning a home, but at any minute it could all come crashing down. I’d rather live knowing I put something on the line and lost it than play it safe and hope everything goes according to plan. So fuck it, buy some BTC and see what happens.
Investing is good…crypto is gambling. Setup an account on www.coinbase.com buy Ethereum and litecoin. If you’re feeling frisky, set up https://metamask.io/ buy a ledger and start trading on binance. Read white papers. Make money. Or don’t.
DISCLAIMER: This article should not be taken as financial advice and you should do your own research. I am not a financial advisor and, again, this is not professional advice. I’m really just a dude on a laptop sitting in a garden spouting BS, so take everything I have to say with a grain of salt. If you buy crypto and loose money, that is your own fault. As a matter of fact, you will probably lose money and this is me saying “I told you so,” so don’t sue me.